Foreign chambers list RP failings, solutions

The Joint Foreign Chambers of the Philippines (JFC) on Monday ticked off supposed failings of the Philippine economy that would make it difficult for the country to recover and grow when the global crisis blew over.

According to the group, the investment climate in the Philippines is unattractive and the reform agenda takes a backseat to pronouncements on economic resiliency.

The JFC added that the government remains silent on targeting “double-digit” growth, continues to impose “barriers” to foreign participation and struggles with combating corruption and smuggling.

The Philippines was also hobbled by outdated infrastructure, poor education system and red tape, the group said.

At the same time, though, the JFC presented strategies that it said the Philippines should pursue once the aftershocks of the global crisis have subsided, en route to recovery and growth.

One strategy was for the country to boost business process outsourcing and tourism, among other sectors that the group described as future “big winners.”

“We believe that the foreign investment community could invest tens of billions of dollars more and create many millions of new jobs, yielding substantial new revenue for the government to spend to improve the lives of your citizens,” said Hubert d’Aboville, president of the European Chamber of Commerce of the Philippines Inc. “But this will only happen once the world economy is back on track and if the investment climate in the Philippines is attractive enough in comparison to alternative, competing economies. Today, it is not. More work is needed. And this is the best time to prepare.”

“In any country and especially in a crisis, we should be talking about reforms and there are suggestions [that the JFC] can make. We have identified eight groups of recommendations, which we hope will be considered as a framework to enable future progress,” d’Aboville added.

Chambers’ prescriptions

The JFC’s recommendations are:

One, the Philippine government should push for more drastic reforms, including pursuing a recovery growth target of 10 percent by 2013 or 2014. “Amid the global crisis, the Philippine government speaks more about resiliency than reform,” d’Aboville said. “We have not seen any plan to target double-digit growth yet.”

Two, the government should enact, possibly this year, the following pieces of legislation: Customs Brokers Act Amendment, DICT (Department of Information and Communications Technology), Investment and Incentives Code (Rationalization), Pre-Need Code, REIT (Real Estate Investment Trust), Reproductive Health Act, Residential Free Patent, Freedom of Access to Information and Revised Kyoto Protocol.

The JFC considers these pieces of legislation as “pro-business reforms,” said Austen Chamberlain, president of the American Chamber of Commerce of the Philippines Inc.

Three, the country should reduce barriers to foreign participation. “We firmly believe that this is the time to lift these barriers,” d’Aboville said, adding that the JFC particularly wants the limitations on ownership of land, utilities and retail lifted. He said that reducing barriers to foreign participation would send a message that the country is seriously prepared for free trade negotiations with the European Union and the United States.

Four, the government must combat corruption and smuggling. Nobuo Fujii, the vice president of the Japanese Chamber of Commerce and Industry of the Philippines Inc., said some Japanese investors were turned off by the perception that the country was corruption-laden. Fujii added that the castigation of corrupt officials has been “rare.”

“Any form of corruption must be eliminated so that the Philippines will realize its very considerable economic potential,” he said.

Five, the country should put up modern infrastructure faster. The JFC is particularly calling for the construction of a high-speed rail line between Manila and the Clark Freeport, and the development of more power plants to ensure a stable supply of electricity all over the country, among others.

Six, the education system must be improved, by increasing the budget of the Department of Education, adding two years to basic education, providing teachers higher salaries, improvement of various school facilities and improving competencies in English, Math, Science, Logic and technical skills among graduates.

Seven, the government should create a more efficient and competitive business environment by improving the country’s competitiveness, reducing red tape, lowering power costs, signing bilateral air agreements to increase international air service and improving education and infrastructure.

Eight, the Philippines must further boost the following industries, which can be “big winners” toward further growth: agri-industrial, business process outsourcing, creative industries, infrastructure and logistics (including renewable energy), manufacturing, mining and tourism (including medical travel and retirement). –Manila Times